People who spend their days looking at stock charts didn't think much of yesterday's rally. After watching stocks grind lower in light volume for over a week, they figured the market was in the midst of a decline that wouldn't end until Wall Street tasted fear. Until we saw a day of big declines on big volume that would knock the complacency out of the market. Yesterday was just a momentary bubble in a decline. A sucker's rally.
If any one group relies on technical analysis, it's the people who trade
futures. It should not be a surprise that they sold the futures yesterday after the stock market closed and continued to sell them overnight in the electronic session.
The real question is whether that early selling will hold, and here it might be worth remembering a little history. The last time before Tuesday the S&P 500 got down around 1285 was on April 19. April 20, stocks rallied higher. People didn't believe in the rally, though, and April 21 we were heading into a lower open. But stocks rallied again, and by April 22 the S&P was at 1358.
"It wouldn't shock me if we had some type of bounce, because the market has tended to rally into holidays," said Bill Meehan, market analyst at
. "But I still feel very uncomfortable with the markets."
At 9 a.m. EDT, the futures were down 5.1, about 8 below fair value, indicating a drop at the open.
Treasuries showed little reaction to revised first-quarter
gross domestic product
figures, which came in basically in line with market expectations. The long bond was off 1/32 to 92 5/32, putting the yield at 5.81%.
Watching those S&P futures trade lower gave Tokyo traders little faith in Wall Street's rally yesterday. With little news on the domestic front, it was a choppy, futures-driven day. The
fell 53.3 to 16,177.19.
With Sino-U.S. relations not looking any better after yesterday's congressional report accusing China of stealing nuclear weapons plans, Hong Kong stocks did not fare too well. The
dropped 100.63 to 12,308.53.
Expectations of a lower New York open sent European indices lower. In Frankfurt, the
was down 45.15 to 5115.29. In Paris, the
was off 17.91 to 4358.77. And in London, the
was down 47.8 to 6189.
Thursday's Wake-Up Watchlist
- Merger talks between oil giants
Chevron (CHV) and
Texaco (TX) - Get Report have stalled,
The Wall Street Journal reported, citing people familiar with the negotiations. The
Journal quoted one person close to the talks as saying: "I think it's premature to say it's dead -- on life support, maybe."
In other news (earnings estimates from
Merrill Lynch named
Circuit City Stores (CC) - Get Report its Focus One stock of the week.
Cooper Companies (COO) - Get Report posted second-quarter earnings from continuing operations of 38 cents, beating the three-analyst estimate by 4 cents.
Gerber Scientific (GRB) reported fiscal fourth-quarter earnings of 36 cents a share, a penny ahead of the four-analyst estimate.
In a pivotal ruling, a Dutch court approved
Gucci's (GUC) sale of a 42% stake to
Pinault Printemps-Redoute, which makes the prospect of a full takeover of Gucci by
LVMH Moet Hennessy Louis Vuitton (LVMHY) remote.
Level 3 (LVLT) and
broadcast.com (BCST) set a five-year strategic alliance aimed at advancing broadband delivery of streaming media.
SFX Entertainment (SFXE) is close to acquiring troubled
Livent, a Broadway production company, for around $100 million, according to reports in
The New York Times and the
Sunglass Hut (RAYS) posted first-quarter earnings of 13 cents, beating the four-analyst estimate by 2 cents and up from the year-ago 7 cents.
Prudential Securities lowered its price target on
Tarrant Apparel (TAGS) - Get Report to $35 from $55.
Westvaco (W) - Get Report posted second-quarter operating earnings of 24 cents a share, a penny ahead of the First Call six-analyst forecast.